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Weekly Global Update for August 19, 2015

Electronic Supply Chain 2Q’15 Growth Update

Chart 1 updates our 2Q’15 growth estimates for the global electronic supply chain. Most but not all major companies have now reported. Negative growth was caused both by weak demand and currency exchange rate effects (weaker non-dollar currencies converted to U.S. dollars).

Source: Company financial reports consolidated by Custer Consulting Group

Taiwan/China Update

Based on country specific PMI leading indicators, growth has slowed and is mostly negative for key Asia countries (Chart 2).

July monthly sales were just released by Taiwan-listed electronics companies, many of which manufacture in China:

OEM revenues were up 4.3% in July 2015 vs. July 2014 but down 9.3% sequentially from June (Chart 3).

Global Printed Circuit Board Production

Thanks to our colleague Dr Hayao Nakahara Chart 24 lists the top 25 largest bare PCB makers in 2014. Naka has carefully researched the world’s PCB producers and Chart 2 covers the first 25 of his 2014 Top 99 ranking.

Source: N.T. Information Ltd

Based on Custer Consulting Group’s tracking of PCB shipments by region, monthly sales although seasonal are flat versus 2014 (Chart 25). On a consolidated basis our world model now projects only 0.4% global PCB growth in 2015 (Chart 26).

Source: Regional PCB data consolidated by Custer Consulting Group

India's PCB Industry – Dr. Hayao Nakahara's comments

Naka wrote:

“India seems to have about 130 PCB makers – some say 250, if “mom & pop” shops are included. None of them are producing PCB for cellphones, some of which require build-up multilayer boards. All PCBs for cellphone assembly are imported from China, practically speaking.

When will India be self-sufficient for this volume business? Despite Prime Minister Modi's push for "Manufacture in India", at this moment there is no big PCB investment in sight. The majority of PCB manufacturing equipment in India is second-hand and not suitable for fabricating cellphone PCBs. The biggest problem I see in India for large scale PCB investment is the lack of infrastructure.

I will visit India on August 13th and stay for two weeks to see if my unkind remarks regarding the Indian PCB industry still hold.”

Suppliers in Taiwan's handset supply chain are expected to see their sales rebound in August to September as smartphone vendors including Apple, Samsung Electronics, Sony Mobile Communications and Microsoft Mobile are set to release new models for the latter half of the year.

Sales for most makers in the handset supply chain were flat in the second quarter, affected by a slow growth in the smartphone market as well as off-peak season effects.

Total silicon wafer area shipments were 2,702 million square inches during the most recent quarter, a 2.5% increase from the 2,637 million square inches shipped during the previous quarter resulting in a new quarterly volume shipment record. New quarterly total area shipments were 4.4% higher than second quarter 2014 shipments. First half 2015 shipments were 7.8% higher than the first half of 2014.

"For two consecutive quarters strong silicon shipment growth has been recorded by the Silicon Manufacturers Group,” said Ginji Yada, chairman of SEMI SMG and general manager, International Sales & Marketing Department of SUMCO Corporation. “Continued growth off of the record level shipped in the first quarter produced another record level of shipments in the most recent quarter.”

Worldwide personal and entry-level storage (PELS) shipments declined by 9.7% year-over-year and 13.8% sequentially, finishing 2Q’15 with 15.1 million units, according to the International Data Corporation (IDC). Shipment values declined along with unit shipments, down 16.1% from a year ago to $1.2 billion.

"The personal and entry-level storage market has been showing seasonality since 2013, indicating that it has become a mature market and is no longer immune to macro trends," said Jingwen Li, Research Analyst, Storage Systems. "Competition from cloud offerings and shift of media consumption preferences within mature markets are negatively impacting demand within the personal storage space, making high growth emerging markets more critical than ever."

Walt D. Custer

Walt Custer is an industry analyst focused on the global electronics industry. Prior to forming Custer Consulting Group he was Vice President of Marketing and Sales for Morton Electronic Materials, a global supplier of specialty chemicals and process equipment for the PCB industry.

Custer has been a member of the IPC trade organization since 1975 where he received both the President's and the Raymond E. Pritchard Hall of Fame Awards. He is currently a member of the IPC Executive Market & Technology Steering Committee. Custer is also a Director of the EIPC European PCB trade organization.

He authors regular “Market Outlook” columns for Global SMT & Packaging magazine, the Journal of the HKPCA and the TTI MarketEYE website.